Will New Finds Mean the End of Peak Oil?

The October Qwest for Returns newsletter that I authored is out. Here is the abstract:

In this issue we present the case for peak oil, emphasizing that talking about peak oil today is not about how much oil there is in the ground, which we refer to as reserves, but the potential imbalance in oil extractive flows or, said differently, how much you can bring out of the ground at any one time. The facts are, the world is facing falling production and it is more difficult and expensive to replace production in the foreseeable future.

Six Saudi Arabias
Despite all of the headlines about discoveries, the IEA projects that the world needs to replace production equivalent to six Saudi Arabias by 2030. Meanwhile, the emerging market economies continue to grow and their resource demand will skyrocket as they grow. Even if we were to assume that demand stays flat to 2030, the world would need to replace production equivalent to four Saudi Arabias.

Comments

[doublebogey:]

The ugly truth!!!! Hard for me to get excited about investing in anything but energy over the long haul. The oil situation as stated above so perfectly and concisely, is going to eventually cause a stampede to Nat Gas at least on this continent. You just need an investment horizon longer than next week or next quarter.

Oct 01 02:08 PM

[jerrydd:]

Don't invest in oil too long as it will peak in price in about 6-8 yrs, then drop as it's overtaken by far less expensive fuels and forced lower.

Facts are many energies, fuels are less costly than $150/bbl oil it will hit late next yr, it will just take a while to gear up enough of them to replace it.

I already drive electric at very low cost as many will by then with NG taking over in trucks, semi's.

There is no shortage of energy, just the equipment to catch, make and use it.

Oct 01 02:47 PM

[ACEMAN:]

Y'all got that right, my man Mr Cam sittin' in his sweet spot on Vancouver Island. However, you got to know that the only way to value exploration oil & gas companies is by the reserves in the ground which are more valuable as time goes on. The secondary factor is a binary relationship between the cost of storage, its CAPEX, and the yield on all that o/g that is stored for a rainy day or the best price on delivery. Y'all have to think supply chain economics if you want to make your money in this game. Now it's time for this mornings beignet and coffee a la Cafe du Monde, NOLA style.

Oct 01 03:13 PM

[meridian575:]

Scary topic to contemplate for sure. Once Oil hits the peak, there WILL be a crazy dash for alternate energy sources. How soon that will happen, is up for speculation, but there is no shortage of options. The technology just needs to be refined and less costly for it to have any relevance in our current situation. Alternative energy, at the moment, just does not make sense economically. For a comprehensive look at the energy sector and the alternatives to OIL, take a look at the following report:
www.twst.com/tt/info/i...

Oct 01 04:34 PM

[Andrew D:]

By 2030? Hmm, 20 year ago, electric cars were just a dream. Powering your house using solar is unthinkable. Technology made and will be making amazing things happen. U.S. is on the verge of alternative energy breakthrough.

You can "predict" anything with the assumption of status quo only for a valid reason. But for 20 years? This is like saying that there will be no living space in United States by 3000 if the current immigration influx continues.

Oct 02 12:05 AM

[Half Empty:]

Invest in fossil fuels. Andrew McKillop argues that the world needs to spend up to $14 trillion between 2010 and 2020 to cover developing new gas and oil fields and building out renewable energy infrastructure to cover for declining oil flows (and gas flows too, by the end of the decade).

Fossil fuels are the ONLY investment opportunity.

But don't expect to get rich.

Oct 02 06:28 AM

[Jrbarnes:]

The new find in the Gulf at 25,000 feet may be reported as BOE, but it is extremely highly unlikely that any hydrocarbons at that depth will produce as oil. At that depth, the reserves are much more likely to be natural gas, of which there is a significant surplus due to the shale gas technology.

Oct 02 01:09 PM